Jefferies expects more favourable year-on-year comparisons in the fourth quarter.

Hong Kong's life insurance market could report weaker year-on-year growth in the third quarter of 2026 as regulatory changes create difficult comparisons with the previous year.

The investment bank said regulatory reforms have affected the timing of insurance sales, creating significant differences in quarterly performance despite continued demand for life insurance products, according to Jefferies.

Jefferies expects the third quarter to face a particularly difficult comparison, whilst the fourth quarter could benefit from a more favourable base.

It said investors may be concerned about weaker third-quarter figures as they look for evidence that the market's long-term growth drivers remain intact following regulatory changes over the summer.

However, Jefferies considers annual growth a more reliable measure of market performance than quarterly comparisons.

The research firm pointed to continued growth in Hong Kong's insurance distribution channels, particularly banks and brokers.

New business premiums distributed through banks increased 81% year on year in the second quarter, whilst broker-distributed premiums rose 84%.

Jefferies said the shift towards bank-distributed insurance, which began in 2022, has increased competitive pressure on traditional agency-focused insurers.

AIA and Prudential have lost market share to HSBC and Manulife over the past year, weakening their relative competitive positions.

However, Jefferies noted that bank and broker sales are typically stronger in the first half of the year, whilst agency sales are more evenly distributed. This could support AIA and Prudential's relative performance in the second half.

Meanwhile, Hong Kong visitor arrivals rose 22% year on year to 4.0 million in September, including 3.2 million visitors from Mainland China.

Jefferies said visitor arrivals remain an important indicator of potential cross-border life insurance demand, particularly from Mainland Chinese customers.